What could happen with mortgage rates this March?

The latest Consumer Price Index report, issued earlier this month, delivered unwelcome news about inflation. According to the report, the uptick in inflation that has been occurring over the last few months accelerated in January, climbing 3% on an annual basis. This surprise uptick could significantly influence the Federal Reserve’s stance when it convenes for its mid-March meeting, potentially delaying the interest rate cuts many analysts had predicted for early 2025. 

That, in turn, could have a big impact on where mortgage rates head next. While many economists had previously anticipated mortgage rates to begin trending downward, January’s inflation report has introduced fresh volatility into rate forecasts. It’s important to note, though, that the Federal Reserve doesn’t directly set mortgage rates. Rather, its federal funds rate influences the broader interest rate environment in which mortgages are priced — with bond market movements, investor sentiment and broader economic indicators all playing crucial roles in where mortgage rates head next.

If you’re planning to buy a home soon, though, it’s important to know where mortgage rates could land this March. So what are we likely to see happen with the mortgage rate environment in the next few weeks? Here’s what to know.

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What could happen with mortgage rates this March?

While the market looks better than last year, buyers should not expect mortgage rates to drop significantly anytime soon, Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors, says.

“The 3 to 4% interest rates aren’t coming back anytime soon. These rates [6% to 7%] could be the new normal for now,” Evangelou says.

While the Federal Reserve is slated to meet again in March, it’s also unlikely that the Fed will choose to slash its benchmark rate at that meeting. After all, inflation has continued to tick up in recent months — so it’s more likely that the Fed will continue to keep its benchmark rate paused for now to try and temper that trend.

The Fed’s rate decisions are just one factor that drives mortgage rates, but they can have a big impact on where these rates head. So, with the high likelihood that the Fed rate will remain paused, it’s unlikely that the mid-March Fed meeting will affect mortgage rates in a meaningful way, according to Evangelou. Buyers and sellers should expect a period of rate stability instead. 

Sebastian Frey, a broker associate at Compass Silicon Valley, agrees. 

“I am not expecting there to be any changes in the rates anytime soon. It seems like we have entered into a stable period for rates, which I expect will be hovering around 7% for the foreseeable future,” Frey says.

Still, consumers should continue to monitor inflation and employment data, according to Frey, as this information could influence future Fed actions, and, in turn, where mortgage rates head after March. 

“It seems as though inflation is no longer trending downward, so we will need to keep an eye on the unemployment numbers. If we enter an environment with increasing unemployment, that could spur the federal reserve to lower rates.”

And, since the Federal Reserve rates only tangentially affect mortgage rates, consumers should pay more attention to the federal deficit, Frey says.

“If [the federal deficit] balloons, we can expect that rates will rise higher, and if it shrinks, they may, perhaps, fall. We can look to see if the Federal Reserve resumes quantitative easing or if they continue their policy of quantitative tightening,” says Frey. 

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Should you lock in a mortgage rate now?

If you’re on the fence about purchasing a home, there may be little benefit to delaying your purchase. With mortgage rates widely predicted to remain stable for the near future, there’s no real benefit to waiting for rates to drop in the immediate future. Plus, the real estate market tends to heat up in the spring and summer, and as a result, buyer competition is likely to rise soon. So, locking in a mortgage rate and buying now could help you avoid the competitive landscape — and the potential for higher home prices. 

So, buyers who are financially prepared may want to consider moving forward with their purchase, Evangelou says. 

“First-time buyers aren’t just competing with other buyers; they are also competing with lower inventory and higher prices. It’s a big hurdle for first-time buyers. We don’t expect any large changes [from mortgage rates]. If they can do it financially, they should not wait,” says Evangelou.

The bottom line

While buyers may be hoping that mortgage rates fall soon, experts largely agree that mortgage rates will remain near today’s rates for now. So, if you’re financially prepared, it makes sense to consider moving forward with your home purchase now rather than waiting. If you’re going to lock in a mortgage rate, though, just make sure to do your homework, shop around and find the right options for you. Rates can still vary by lender, after all, and even a slightly lower rate on your mortgage loan could equate to big savings over time.